Will your credit union be the chicken or the pig?

The difference between involvement and commitment is like ham and eggs. The chicken is involved; the pig is committed. The old business fable of The Chicken and the Pig is obviously about commitment to a project or cause. When you are faced with transforming lending solutions, tackling a core system review, or dealing with compliance regulations, such as the recent CFPB warning, is your CU just involved or truly committed?

Last week, the CFPB (Consumer Financial Protection Bureau) issued a bulletin to banks and credit unions to warn that they must have systems in place to ensure accuracy when they pass on information, such as negative account histories, to checking account reporting or other credit reporting companies.

As summarized by CFPB to Credit Unions: Checking Reporting on Our Radar, “Consumer reporting companies that focus on checking accounts typically generate reports on charge-off amounts, past non-sufficient funds activity, unpaid or outstanding bounced checks, overdrafts, involuntary account closures and fraud.”

The CFPB added that it’s concerned about inaccuracies and inconsistent information that financial institutions provide to reporting companies. Banks and credit unions should expect accurate information from checking account reporting companies in order to make fair assessments of deposit account applicants, and if the system is tainted with incomplete, inconsistent and inaccurate information, they cannot make informed decisions, the bureau noted.

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